What Are Production Strategies? (With Steps and Benefits)

By Indeed Editorial Team

Updated 15 December 2022

Published 27 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Production planning is a way to organise the manufacturing process to increase the competitive advantage of a company. Businesses can use production strategies to define operations and raise efficiency. Learning about how to create a production strategy can help you plan ways to meet the company's long-term goals effectively. In this article, we discuss the definition of production strategies, explore their benefits and provide six steps to create one.

Related: What Does a Production Engineer Do? (With Primary Duties)

What are production strategies?

Production strategies are comprehensive plans that companies create to achieve high productivity while fulfilling the expectations of important stakeholders. They provide details of the step-by-step process of creating the product from conception to completion. This helps to inform the manufacturing department of the number of goods and services to produce and provides a timeline for production. These strategies also enable management to decide on the type and quantity of raw materials required to produce a product and make plans to allocate resources accordingly. With strategies for production, managers have a process map they can use to develop production schedules.

Related: What Does a Project Manager Do? (Plus Requirements and Pay)

What are the benefits of creating strategies for production?

Here are some of the top benefits of creating strategies for production:

Improves organisation

Production planning helps managers determine the types of materials a manufacturing project requires. As such, they can source the necessary materials and create contracts with suppliers to ensure a steady supply of raw materials. With clarity on the quantity and frequency of supplies, professionals can devise plans on how to transport the materials and where to store them, making the process more organised. Having a strategy also helps management to create timelines with details of when to complete each stage of production. This can ensure the timely production and delivery of goods to clients, thereby increasing customer satisfaction.

Related: What Is a Supply Chain Manager?

Strengthens communication

Having a definite plan and making details about it clear and accessible can significantly improve communication. It's more likely for suppliers to provide the correct amount of raw materials at the right time and place when there's clear communication between the management and them. The professionals involved in the production process can also understand their role and duties better when there's a comprehensive plan. This can help them feel more focused at work and enables them to maximise their time.

Increases efficiency

With organised plans on how to produce and distribute products, the production process can become more efficient. When you understand each aspect involved in the production of the product, you can pre-establish practices that enable you to create and disburse goods quickly. You can also devise ways to quicken the process by introducing automation of certain tasks. For example, as part of the production strategy, you may decide to purchase machinery to do the final packaging of a product, as that task may be time-consuming and expensive when done manually.

Related: 15 Project Management Skills a Project Manager Should Have

Improves resource allocation

Strategies can help you make decisions on how to use the company's resources effectively. These resources may be the materials used to make the products, the work hours of professionals involved in the production and the company's funds. It's common for production plans to contain information and instructions on how to use these resources. This helps to ensure that professionals have the right amount of materials to make the product. By ensuring that there isn't an oversupply of materials, the company can avoid wastage of resources.

With a detailed plan, the management can also ensure good use of the company's talents, as they can distribute the tasks among professionals evenly. The managers can also assign duties according to the professionals' educational qualifications, skills and knowledge more effectively when they have a detailed outline of the tasks.

Related: How to Write a Demand Planner Resume (With Tips and Example)

Lowers cost of production

When there's proper planning of the details of the company's production schedule and process, managers can make highly cost-effective decisions. During the planning process, professionals may propose to use less costly resources or even think of innovative ways to streamline the production process to reduce expenditure. There are also cost savings when there's less wastage in the production process due to an oversupply of materials. Reviewing the current cost of production and discussing each of the expenditures when creating a production strategy can help managers to use the company budget more appropriately.

6 steps to create a production strategy

Follow these steps to create a production plan to achieve higher levels of productivity:

1. Set long-term goals

The first step is for you to determine the company's long-term goals. These goals primarily focus on improving productivity, but can also consider other aspects such as investment levels, stock levels and total costs. It's important to set challenging targets so that there's a greater drive to innovate and work hard to achieve those goals. Encourage your team to think big and ask for suggestions on production targets.

It's necessary to have sub-goals between long-term goals so that you can assess how well the company is doing along the way. Be specific in your goal-setting and write percentages and the number of years. For example, you can set a goal to increase productivity by 15% each year for the next five years.

2. Hire an expert

Regardless of how well-established the company is, it's useful to recruit an expert to assist in the development of the production strategy. An ideal expert is someone who has proven experience in this field and in-depth knowledge of the industry. Their qualifications may translate into valuable opinions and advice. This person could be an existing employee or a consultant. It's essential that this expert has a compatible working style and likeable personality so that you and the other associates feel comfortable working with them.

Having an understanding of various tools and information such as Six Sigma, production-related IT solutions and production finance makes them a suitable person to work with. Even though industry-specific knowledge is valuable and necessary, they also require knowledge and experience from various industries to craft appropriate strategies to advance the company's competitive value.

3. Conduct an internal analysis

It's important for production strategies to be specific to the company's unique situation. With the assistance of the expert, perform an internal analysis to identify the areas that have the greatest potential. As a team, review the costs of each stage of production and discuss how to reduce them. You may think of ways to reduce the consumption of raw materials or energy. For example, you may consider investing in solar panels to reduce energy costs.

Alternatively, brainstorm how to decrease the number of hours spent by professionals to produce each item or how to save on maintenance costs. With an overview of the entire production process, you can make better decisions on where to concentrate your efforts to achieve the company goals.

4. Develop the strategy

After setting the long-term goals and performing an internal analysis of the company, the next step is to develop the production strategy. Together with the team and the expert, you may analyse various scenarios, assess the feasibility of ideas, design different layouts and make calculations of projected costs. You may formulate a detailed outline of every task, function or change that you plan to implement to meet each short- and long-term goal. It's vital to be detail-oriented and write figures, dates and other key information as being specific can help the department remain focused.

5. Create visuals of the strategy

After crafting the plan, it's necessary to communicate it in a way that's easy to understand. Creating a visual representation of the strategy can help stakeholders and employees to comprehend and adhere to the plan. You may use a story map, slide show, Gantt chart or create a 3D image of the new layout. To make the strategy interesting and memorable, you can even create an animation video to illustrate the new processes.

Fix a date for a meeting with the relevant personnel to communicate every aspect of the production strategy. During this meeting, allow for questions and feedback on the strategy.

Related: What Are Story Maps? (Definition, Uses, Examples and FAQs)

6. Evaluate the plan

After gathering the feedback, review the plan and make any necessary adjustments. As you begin production, continue to speak to the professionals to understand which areas require improvement. You may also want to evaluate the production by measuring the effectiveness of the machinery and practices. You can do this by comparing the current production level of the company to the expected performance. This can help you gain perspective on the capacity in which the company is achieving its goals.

Explore more articles